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Climate Regulatory Risk and Corporate Bonds / Lee H. Seltzer, Laura Starks, Qifei Zhu.
- Format:
- Book
- Author/Creator:
- Seltzer, Lee H.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w29994.
- NBER working paper series no. w29994
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2022.
- Summary:
- Investor concerns about climate and other environmental regulatory risks suggest that these risks should affect corporate bond risk assessment and pricing. We test this hypothesis and find that firms with poor environmental profiles or high carbon footprints tend to have lower credit ratings and higher yield spreads, particularly when their facilities are located in states with stricter regulatory enforcement. Using the Paris Agreement as a shock to expected climate risk regulations, we provide evidence that climate regulatory risks causally affect bond credit ratings and yield spreads. Accordingly, the composition of institutional ownership also changes after the Agreement.
- Notes:
- Print version record
- April 2022.
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